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                        BAY APARTMENT COMMUNITIES, INC.
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               (Name of Registrant as Specified In Its Charter)

                        BAY APARTMENT COMMUNITIES, INC.
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   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

   
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[LETTERHEAD OF BAY APARTMENT COMMUNITIES APPEARS HERE]


                  BAY APARTMENT COMMUNITIES/AVALON PROPERTIES
                                MERGER MEETING
                                 JUNE 4, 1998


Dear Fellow Stockholder:

     By now you should have received your proxy materials for the Annual Meeting
of Stockholders of Bay Apartment Communities scheduled to be held on June 4, 
1998.  As you know, the meeting has been called to approve the merger agreement
with Avalon Properties which requires an affirmative vote of 2/3's of our 
stockholders.  Your vote is important - a failure to vote is equivalent to a 
vote "against" the merger - so we urge you to promptly return your proxy.


                             CONSIDER THE BENEFITS

     We are extremely excited about the future prospects of your company 
following the merger.  Through the creation of one of the largest luxury 
apartment companies in the nation, certain of the benefits to stockholders will 
include:

 .  Improved Long-Term Earnings Growth

     We fully expect that the merger will result in improved long-term earnings
     growth and enable Bay to achieve many of its long-range goals much quicker
     and with less risk in light of the resulting improved business and
     financial conditions.

 .  Greater Financial Strength and Flexibility

     Bay will enjoy greater size and resources, as well as enhanced financial
     flexibility to enable it to pursue a more aggressive and flexible business
     plan. A strengthened credit profile will also enable your company to borrow
     on more attractive terms.

 .  Geographic Diversification

     The merger will enable Bay to acquire a portfolio of luxury apartment
     communities in select high barrier-to-entry markets which, among other
     things, will further mitigate any adverse effects of changes in general and
     local economic conditions.


 
 . Strengthened Management Team

     Your much larger company will benefit substantially from the enhanced level
     of management depth and experience, and commitment to taking advantage of
     value enhancing activities and building stockholder value.

 . Greater Total Market Capitalization and Liquidity

     Stockholders will benefit from enhanced liquidity as a result of Bay's
     increased total market capitalization, resulting in a more attractive
     investment vehicle.

 . Substantially Increased Dividends

     Stockholders of Bay will benefit from a 21% increase in their quarterly
     dividend. Your company expects to pay quarterly distributions at an
     annualized rate of $2.04 per share, an increase of $.36 per share over the
     current annualized distribution rate.

                            YOUR VOTE IS IMPORTANT

     In order to achieve the many benefits of the proposed merger we need your 
support. Because the vote requirement is 2/3's of our outstanding shares, your 
vote is very important. Please act today by signing, dating and mailing your 
proxy.

     We look forward to discussing the many benefits of the merger with you. In 
the meantime, should you have any questions, please feel free to call Jeff Van 
Horn at (408) 260-3712, or I may be reached at (408) 260-3715.

     On behalf of your Board of Directors, thank you for your continued support.

                                                Sincerely,

                                                /s/ Gilbert M. Meyer

                                                Gilbert M. Meyer
                                                Chairman of the Board